Avoiding UK excise duty on wine — window of opportunity firmly closed
The Joustra Case 23rd November 2007, ECJ C-5/05
It was widely suggested that the judgment of the ECJ in this case could have dramatic implications for wine retailing in the UK.
Mr Joustra acted on behalf of some 70 members of a group of Dutch wine-lovers, the "Cercle des Amis du Vin". Periodically he ordered wine in France for himself and the other members of the group. He arranged for a Dutch transport company to collect the wine and deliver it to his home, from where it was delivered on to the various members. Mr Joustra made no profit from these activities. Each member reimbursed Mr Joustra for the cost of his wine and his share of the transport costs. Each member received no more than the amount of wine they would have been entitled to bring back had they personally gone to France and bought it there.
The object of the exercise was to pay only French excise duty, which is very low. However, the Dutch authorities claimed that in the circumstances Mr Joustra was also liable for Dutch excise duty. He challenged that claim. The Dutch court referred the question to the ECJ.
What caused the excitement was the preliminary opinion expressed by the ECJ's Advocate General. He said it should be held that where a private individual acquires excisable goods for his own use in one Member State and personally arranges for their transport, but does not himself transport them, to another Member State for his own use, duty should be chargeable only in the first Member State. That wouldn't have helped Mr Joustra, who was buying on behalf of others. But if the ECJ agreed with the Advocate General, it was said, UK consumers would be able to buy online or mail order from France, and other low excise producer countries, without having to pay UK excise duty. Every supplier who could offer wine in that way would have a huge price advantage over those who could only offer it UK duty paid. Many UK retailers would go to the wall, and so on
The ECJ closed the door pretty firmly on these possibilities. Disagreeing with the Advocate General, it ruled that it is only where a private individual in Member State A buys wine in State B for his own personal use, and transports the wine personally, that he only pays duty in State B.
Where such an individual buys for his own personal use, or on behalf of someone else, and arranges transport by another person (whether on a commercial basis or not) then he must pay duty in State A. In such a case the duty paid in State B can be re-claimed.
In 2004 the European Commission proposed a change in the law, which would enable an individual who arranges transport by an agent to pay only duty in State B as long as he buys for his own use. The Governments of six Member States, including the UK, argued against extending the law in that way in this case, and it must be anybody's guess as to whether, and when, the situation may change.
It should be noted that to take advantage of the limited exemption which remains, the quantity purchased for personal use must be within the limit of 90 litres (inc a maximum of 60 litres sparkling). Purchases in excess of that amount are assumed to be for commercial purposes, and will be subject to duty in the State in which the goods are released for consumption.
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Posted 30.11..2006
